RBA minutes give market confidence

15.04 AEST, Tuesday 17 July 2012

RBA minutes give market confidence

By Ben Taylor (Sales Trader, CMC Markets)

Today’s RBA minutes have given our market the confidence it needed to jump out of the box. It now seems clear that rates are on hold as previous rate reductions have helped guide the local economy through the global storm.

The minutes revealed that the US recovery still remains a concern and that Europe is in decline however the minutes also shed some light on China’s situation which now seems better than previously expected with the economy slowing less than anticipated.

The Aussie dollar has jumped on the minutes and held above 1.03 as we can now expect the RBA to pause on rates cuts in the near term. The Aussie dollar is also benefitting from a revival of risk which is seeing the USD drop against its major trading rivals.

Markets seem to be repositioning for the possibility that economic conditions are bottoming. China slowing less than anticipated, positive talk from the Chinese government over the weekend and stimulus initiates in China and Europe are contributing to our market seeing the glass half full.

The RBA rate cuts are now weaving their way through our economy while our index sits below its 200 day moving average. A little more investor conviction will see our markets test the upside of our trading range in the coming weeks.

Tonight’s testimony from Ben Bernanke is also helping stocks rally today for those who believe that QE3 is just around the corner.

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